Arconic CEO quits over letter sent in 'poor judgment' to Elliott

Klaus
Kleinfeld, Chief Executive Officer of Arconic, takes part in the
Yahoo Finance All Markets Summit in New YorkThomson Reuters

By Arunima Banerjee

(Reuters) - Arconic Inc said on Monday Chief Executive Klaus
Kleinfeld resigned after the U.S. specialty metals maker found he
sent a letter in "poor judgment" to Elliott Management, with whom
it is embroiled in a proxy war and which used the chance to again
criticize the company's board.

Activist hedge fund Elliott said the letter "read as a threat to
intimidate or extort a senior officer of Elliott Management based
on completely false insinuations" and that it immediately
informed Arconic's board of the letter.

Arconic said Kleinfeld's resigned as he sent the letter – the
content of which neither party made public – without consulting
the board, and not in response to the proxy fight or Elliott'
criticisms of the company's strategy, leadership or performance.

Arconic also said its board reaffirmed the strategy developed by
Kleinfeld, under whose leadership, it said, the company improved
its performance.

Elliott said the company's statement was to defend Kleinfeld and
"should be enough to prove that Arconic's Board simply lacks the
judgment to steward Arconic."

Elliott, which owns a 13.2 percent stake in Arconic, started its
campaign against the company in January, when it nominated five
directors to the board and outlined ways for Arconic to improve
its share price.

Arconic's stock jumped as much as 9.8 percent on Monday, before
easing to trade up 2.5 percent at $26.56 in late afternoon
trading. The stock had risen nearly 14 percent since Elliott
mounted its proxy bid through its close on Thursday.

Kleinfeld had served as Alcoa Inc's CEO for eight years and
oversaw the company's split-up into Arconic and Alcoa Corp last
year.

Arconic said since Elliott's central objective – a CEO change –
had been realized, the hedge fund should now chose whether to go
ahead with its proxy fight or help find Kleinfeld' successor.

The company said its interim CEO would be David Hess, a former
United Technologies Corp executive who was appointed as an
independent director to Arconic's board in March.

Elliott's choice to lead Arconic has been Larry Lawson, who
resigned as CEO of aircraft parts supplier Spirit AeroSystems
Holdings Inc last July. Lawson is also Elliott's consultant.

Elliott reported in March that Spirit AeroSystems had said Lawson
breached a non-compete clause in his retirement contract by
consulting for Elliott, a view the hedge fund has said it
disagreed with.